The dream of entrepreneurship is really the American Dream. It’s all about being your own boss, having financial security, and creating something from nothing through hard work, dedication, and skill. It’s the rare person who hasn’t pondered the path of how to become an entrepreneur.
I certainly did, and from a young age. Granted that I come from a long line of entrepreneurial people: my great grandfather was a cattle trader and wildcatter. My grandfather and father were in the oil and gas industry and I have been involved in everything from oil and gas to manufacturing, real estate and skin care. In short, I have been a serial entrepreneur for the past 35 years. And in that time, I have both made and lost millions of dollars, managed hundreds of employees, and suffered from anxiety, depression, insomnia, stress, and other health issues.
I have learned lessons from some of the greatest minds in the business world, as well as from my own spectacular failures. But one thing I have never done is quit. And that is lesson one on how to become an entrepreneur.
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What People Get Wrong About Entrepreneurship
When I talk to people about entrepreneurship and how to become an entrepreneur, there are some common misconceptions that always arise.
They are almost always based on stereotypes that have seeped into the culture over time. We see them in movies, television, and even from entrepreneurs themselves. But like all stereotypes, they are overgeneralizations that don’t allow us to see the true, in-depth picture of the entrepreneur. So, here are the most common myths I hear about entrepreneurs.
There are “Born” Entrepreneurs
It’s true that if you come from a long line of entrepreneurs (as I did), you are more likely to become one, but it’s not genetically inherited. It’s much more a function of having entrepreneurs as role models in your life. After all, colleges and universities have been teaching all kinds of people business skills and entrepreneurship for decades.
Now, that’s not to say that there are no “born into” advantages that can help with entrepreneurship. Money is a great example of this. If you were lucky enough to be born into a family with money, it will make entrepreneurship a much easier proposition. After all, funding is a major part of any start-up.
That being said, most entrepreneurs were not born into money and still became successful. More on how to do that later.
Entrepreneurs Don’t Have a Social Life
This one is pretty common and sometimes perpetuated by the entrepreneurs themselves. There can be a kind of a machismo attached to the image of a workaholic: someone who is single-minded and entirely focused to the exclusion of other things.
While entrepreneurship does take a lot of time, effort, and dedication, entrepreneurs, by necessity, need to be social creatures. No one rises to the top without a wide network of friends and acquaintances.
They Are Extreme Risk-Takers
There’s no getting around taking risks as an entrepreneur. However, successful entrepreneurs are experts at taking calculated risks — carefully exploring all the options as well as the potential ups and downs before making a decision.
The person who is willing to risk it all on a roll of the dice isn’t going to be in business very long.
They Are Super Smart
In fact, only about 26% of entrepreneurs have a college degree. While getting or having an education can’t (or shouldn’t) hurt, it is by no means a prerequisite for becoming a successful entrepreneur.
They Raise Money Through Bank Loans and Venture Capital Firms
My hat’s off to you if you can pull that one off, especially a bank loan. You’ll find that banks are more than willing to lend you money once you’ve become successful. But before then, you’re lucky to get a cup of coffee out of them.
No, most new entrepreneurs are raising funds either personally or through friends and family.
Anyone Can Be an Entrepreneur
All you need is a great idea and some hard work. After all, if you build a better mousetrap, the world will beat a path to your door.
Sorry, but that’s just not true.
There is a lot involved in launching a successful startup. Not everyone has the time, ability, or inclination to do it. The truth is, successful entrepreneurs do share some similar traits and habits. We’ll go over those next.
Common Traits of Successful Entrepreneurs
How much is a great new idea worth? Well, that depends. If you’re Steve Jobs, it’s worth billions of dollars. If you’re Steve Jones, whose content working a nine to five job for 30 years, then it’s worth nothing.
The truth is that there are great ideas all around us all the time, but it’s the entrepreneur that gives the idea value.
So how do you know if you have what it takes to become a successful entrepreneur? Here is a list of some common traits of successful entrepreneurs.
We hear this one a lot, but what does it really mean?
For the entrepreneurs, passion is an overabundance of enthusiasm for their work. And we’re not talking about a passion for making money or getting rich. That should be a byproduct of passion.
The kind of passion we’re talking about is a complete belief in how the business, product, or service adds value to the consumer. People with this kind of passion are willing to do whatever it takes to see that vision through.
Let’s face it, rarely do human endeavors go exactly as planned. This is especially true in a start-up situation. No matter how good you are or how many times you’ve done it, things are going to come out of left field and smack you upside the head.
Now, I’m not going to tell you that it’s fun when something unexpected comes out of nowhere and turns your world upside down, but I will say that if you have the tenacity to work through the problem, it will serve as a lesson in resourcefulness for both you and your team.
I’m putting this one right after tenacity because sometimes solutions aren’t a matter of pushing through a problem but going around it.
Back in the 1930s, having wallpaper was the “in” thing. The problem was that it literally was paper. When it got dirty, cleaning it with water and other household products quickly soaked and degraded the paper. The solution was to use a clay like substance to clean the wallpaper without getting it wet. Then in the 1950s, preschool children in Cincinnati started using this same clay to make Christmas decorations. Pretty soon, it was repackaged into Play-Doh.
The most successful entrepreneurs are flexible enough to change direction when they need to.
As a startup entrepreneur, it’s extremely important that you exude confidence in your business, product/service, and especially in your own abilities. After all, you need to be inspiring to investors, employees, and customers. No one is inspired to invest, follow, or buy from someone who isn’t confident.
Arrogance, on the other hand, can be just as detrimental to your business as a lack of confidence. For investors, arrogance is a warning sign that you won’t listen to their input or advice. For employees, it can set up a rigid autocratic management style that stifles creativity. And for customers, it can signal a lack of appreciation for their business.
In short, confidence is a must, and arrogance is a no no.
Being a Motivated Self-Starter
I’ve never met a successful entrepreneur who wasn’t a highly motivated self-starter. Now part of that comes from the passion they have for their business. They really enjoy what they do and can’t wait for Monday to roll around so that they can start again.
But, another part of that is discipline. They tend to approach everything in life with discipline. Work is the obvious example, but even leisure activities are an exercise in discipline. For example, they promised their spouse that they would get some yard work done, but their kid has a game. Their answer is not to skip either one, it’s to schedule both activities into the day.
Being a Calculated Risk Taker
We talked a little bit about this earlier, and the word “calculated” is very important here. We’ve all heard the saying that “With great risk comes great reward.” But too many people confuse “great risk” with “foolish risk.”
A straightforward way to think about this is buying 100,000 lottery tickets. It certainly fits the criteria of a great reward coming from a great risk. But is it a smart (calculated) risk? If you’re intelligent enough to be reading this article, you know the answer.
So, here’s how an entrepreneur thinks about this situation. Instead of buying 100,000 lottery tickets, how about taking that money, use 50% as a down payment on a property that needs a little fix-up; and use the other half to fix it up and then sell it for a $50,000 profit? Now that is a calculated risk.
Practical Steps to Become an Entrepreneur
When counseling people on how to become an entrepreneur, I encourage them to take an honest assessment of themselves. This is always much harder than people think.
As humans, we are notoriously bad at self-assessment. We tend to overestimate our skills and abilities. That’s why almost everyone thinks that they are an above average driver.
Even so, if you are considering life as an entrepreneur, it’s important to be as honest as possible when doing these self-assessments. Once you have a clear idea of your strengths and weakness, you can use these tips to get started.
1. Develop Your Idea
It doesn’t have to be a totally unique or groundbreaking idea in order to be a successful one. The popular rideshare company Lyft was started three years after the introduction of Uber. They took on the business model of Uber and just tweaked it a little.
Just because there is competition in a field doesn’t mean that you can’t be very successful, too. But this is why developing your idea is so important.
Go ahead and use the business model of the most successful competitor but make it your own by identifying shortcomings and weaknesses that you can exploit for your own success.
2. Research, Research, Research
Research the industry and get to know the players, trade associations, and conventions. Research the products and services involved. It’s not uncommon that the most profitable part of a business isn’t the “main” product, but an ancillary add-on product.
For example, it’s not uncommon for a restaurant to break even on the food and only make money on the drinks. The reason they can offer a plate full of food for $5.00 is really the $2.00 Coke or $5.00 glass of wine you order with it.
Finally, research the customer. There is literally no way you can understand your customer too much. Things like average age, sex, buying habits, interests, attitudes about health, wealth, social media, and status are all helpful in your targeting and marketing efforts.
3. Create a Formal Business Plan
This step is often overlooked and shouldn’t be. As a one or two-person show, you can probably get along fine without one. But once you start hiring employees, having a formal business plan is essential.
Unfortunately, if you don’t put in in place right away, by the time you need it, you’ll be too busy to create one. It’s always smart to do it up front.
4. Build Your Network
No one can build a successful business on their own. You’ll need investors, attorneys, accountants, bankers, as well as vendors, industry contacts, employees, and a whole host of others.
So, start attending trade shows and conventions, as well as joining trade association and online groups. These are all great networking resources for you.
5. Test Your Ideas
Start small. There’s no way you can predict every possible problem or issue that will arise. You’ll find it’s much easier to address these issues if they’re limited to a few test markets as opposed to a global rollout.
6. Turn Early Customers Into Fans
Another advantage of starting out on a small scale is that you can develop more personal relationships with customers. Make sure to provide a great experience for these first customers to build up the most effective advertising there is — word of mouth.
7. Raise Capital
At this point, you should have a proven business model with customers, cash flow, and a plan for expansion. You can now start to raise money through investors, venture capitalist, and banks.
8. Scale Your Business
Take the money raised and use it to scale the business for maximum returns for you, your employees, investors, and early backers.
In my opinion, there has never been a better time in our history to become an entrepreneur. The old barriers to entry — access to large amounts of capital, expensive professional services like legal and accounting, and staffing issues — can all be overcome thanks to the internet. There are people all over offering these services as freelancers and at discounted rates.
If you truly have a good idea that you are committed to, then really the only thing stopping you from joining the ranks of entrepreneurs is you.
More Tips on How to Become an Entrepreneur
- 20 All-Time Best Entrepreneur Books to Make Your Business Successful
- 10 Most Successful Entrepreneurs (And What to Learn from Them)
- How to Succeed in Business: 10 Skills Every Entrepreneur Needs
- How to Be a Successful Entrepreneur (15 Powerful Actions to Take Today)
Featured photo credit: Humphrey Muleba via unsplash.com
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